I am an e-Money researcher and crypto economist focused on expanding the circulation of nonpolitical digital currencies. My career has included senior influential posts at Sumitomo Bank, VISA, VeriSign, and Hushmail. Currently, I serve on the Board of Directors for the Bitcoin Foundation.

Bitcoin Casinos Release 2012 Earnings

It is earnings season on Wall Street and it is reporting season for some of the leading bitcoin casino operators. Three significant Bitcoin-related gambling sites have reported their earnings and statistics for calendar year 2012. Some of the data is fairly revealing giving us a fascinating glimpse into the worldwide growth of bitcoin and gambling.

First up is the venerable SatoshiDice, which is the leading bitcoin gambling site in terms of amount wagered. Responsible for more than 50% of daily network volume on the Bitcoin blockchain, SatoshiDice reported first year earnings from wagering at an impressive ฿33,310. During the year, players bet a total of ฿1,787,470 in 2,349,882 individual bets at an average monthly growth rate of 78%. Earnings were calculated from eight months of data covering May to December, 2012.

With servers based in Ireland and promoted by Erik Voorhees, SatoshiDice is considered a blockchain-based betting game and it is self-described as the “most popular Bitcoin game in the world.” Similar to random number generation, the site uses a method to produce a number between 0 and 65,535 which is then wagered on by making a bitcoin transaction to one of the static addresses representing different payouts. The odds are calculated to give the house an edge of 1.90% with full transparency because all dice rolls and earnings statistics are verifiable using the blockchain.

Operating expenses were minimal in 2012 and the company also paid monthly bitcoin dividends to ‘public’ shareholders which represent 10% of the total 100,000,000 outstanding shares. To invest in the operator and bet on the house, SatoshiDice shares are traded on the MPEx bitcoin stock exchange under ticker symbol S.DICE (see August 19th, 2012 Prospectus). At the current exchange rate of $17.00 per BTC, SatoshiDice is a company valued at $8.9 million.

Voorhees emphasizes that until the site’s legal status is clear, all balances and accounting will be maintained in play-money bitcoin, because “it’s better to keep it completely separate from real life.” For all of the venture capitalists out there, here is how SatoshiDice started. Where is the next big one?

Provably-fair bitZino, covered previously in this column, offers blackjack, video poker, roulette, and craps in a bitcoin-only environment. When roulette was launched it quickly rose to become the top bitZino game, leveling off now to become equal with blackjack in terms of hands played. In an email to Forbes, BitZino reported first year earnings from wagering of ฿10,137. During the year, players bet a total of ฿664,192 in 3.2 million individual bets. Earnings were calculated from seven months of data covering June to December, 2012.

Since inception, unique user count went from 3,086 in June to 8,737 in December, which represents a period growth rate of 183% or average monthly growth rate of 30.5%. Earnings during that same time went from ฿326 in June to ฿3,240 in December, which represents a period growth rate of 894% or average monthly growth rate of 149%. Owner Larry Taad expects a 500% increase in these user count and earnings numbers for 2013.

Interesting trends noticed by bitZino include near daily cash-outs from players on the site which simply would not be possible with other payment methods and an astounding payment processing fee of just 0.0031%.

Seals With Clubs is an innovative and friendly bitcoin poker site launched in August 2011 by a small team of former online poker players. Choosing to remain anonymous, they happily accept players worldwide and all cash-ins and cash-outs are denominated in bitcoin so no bank accounts are required and even your email address is optional. Poker Mavens by Briggs Softworks provides the gaming software for the site. Seals affiliate manager and site pro is the enthusiastic Bryan Micon, who said “with the upcoming release of our Android app we hope to explode the BTC poker space in 2013.”

Seals confirmed that the company has paid out ฿110,587 over 7,972 transactions in the 16 months since their opening. They have over 10,600 player accounts with 5,697 of those logging in since October 1st, 2012. Typically, their busiest game time is 7-11pm EST and 972 types of Sit’N Go tournaments are also available. Players can open custom ring games and December brought in 1,000 unique players to at least one raked hand.

With game servers based in Iceland, Seals With Clubs is dealing about 10,000 hands of poker per day and raking only about 4,000 of them. If it is a tournament hand, no flop dealt, or below ฿0.04, then there is no rake. The current rake is 2.5% with a cap of ฿0.10 per hand which is slightly less than half of what other poker sites would charge.

Conservatively assuming that only 5% of the raked hands get to the maximum rake, then Seals With Clubs would be earning at least ฿20 per day on 4,000 raked hands dealt (or ฿600 per month on average). The operator does not make details available down to that level so we have no way of knowing with certainty. However, they do give a generous share of their rake back to high volume players and to others indirectly via freerolls and other promotions.

With privacy, efficiency, growth, payment irreversibility, and cost savings as demonstrated by the above, it’s only a matter of time before the mainstream casino operators of Gibraltar and Malta realize the benefits of a gaming economy that leverages the ideal digital casino chip.

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As the site pro & affiliate manager for SealsWithClubs, I’d like to thank Jon for this article about us and two other “pure bitcoin plays” that I have much respect for. In 2012 it was a handful of early adopters that spread bitcoin games: In 2013 I expect the space to explode.

AAAAGGGH, timing…. In the U,S., this is (just) another example for the newly-enabled Schumer cabal to up the ante. I’m afraid Satoshi will disapprove of this informative and revealing article. ~Goodness man!, the price has spiked $2 in three days and only late action is keeping the price down at $17 and change! $20 looks like Daytona Beach right now! We are out here trying to get them before the MAN does, for goodness sake! ;) ~ b

I live in southeastern Connecticut, just a few minutes from 2 of the largest casinos in the US, Foxwoods and Mohegan Sun. They are undoubtedly prohibited from offering any kind of on-line gaming, but are probably not terribly worried about competition from bitcoin. Yet. :)

While these three are the leaders in each of their niches, they don’t give the whole story. Dozens of smaller Bitcoin-based online wagering sites exist as well. Many, including KingCo.in and others, implement a mechanism that qualifies them as being “provably fair” — the other innovation that mainstream operators in Gibraltar, Malta, Macau and Vegas should get up to speed on.

Mem’s List is the leading directory of Bitcoin-based online gaming: http://bit.ly/Mx8PxL

Thanks for your comment. Actually, the article did include a link to Mem’s outstanding list hidden in the 5th paragraph. While many excellent bitcoin-based wagering sites exist, the article focused on the ones that reported earnings and statistics and I encountered several casino operators that were unwilling to do that.

Bitcoin has stablished itself strongly on the gambling industry. I hope it eventually conquers the rest of industries as well in the future and we can buy apples with satoshis at the market with our mobile phone. For beginners, find here how to set up Bitcoin on your computer and a list of websites that give free bitcoins: http://thebitcoinmaster.blogspot.com

bitZino is an absolutely terrible scam people. I’ve gambled A LOT in my life and have never seen anything as despicable as this web site! Honestly if you gamble there over places like 888 or Casino.com then no offense but you deserve to lose your money. Any gambling forum where they are mentioned everyone says how impossible they are to deliver such ridiculous numbers, whether it be craps, roulette or slots or blackjack, they will take you for everything you have. Stay away if you know what’s good for you, and if you go there nad give them your Bitcoins, don’t say you weren’t warned and as for their “provably fair” thing, it’s a scam too. Go where the real players play, and rest assured the big guys are implementing Bitcoin as yu read this!